Thick with palaces, elephants and crowded old bazaars, the Pink City of Jaipur is a postcard from ‘exotic India’ brought vividly to life. Its annual literary festival may be only six years old, but it tries to live up to its setting, adding 21st century flash and dazzle to the mix. This year did not disappoint. More than 60,000 people squeezed into the elaborately painted halls and cool cotton tents of the Diggi Palace to gawk at literary celebrities and witness a raging controversy surrounding the absence of much-feted writer Salman Rushdie, whose controversial The Satanic Verses — which earned Rushdie a fatwa from Iran’s mullahs — is still banned in his home country. For all the festival’s glitz, Rushdie’s no-show has stirred up a long-overdue debate about India’s limits on free expression.

The best-selling authors greeting fans in Jaipur this year included David Remnick, editor of The New Yorker, who slung one-liners about the 2012 Republican primary (“We are watching a clown show”) as a cow lowed behind him. Canadian novelist Michael Ondaatje looked beatific in his halo of white curls, as clusters of schoolgirls queued up for his book signing. Tiger mom Amy Chua, who came with her husband, daughters and sky-high heels in tow, found kindred spirits among the plump Indian matrons who are just as suspicious about lax American parenting as she is. There were plenty of worthies, too — from Jamaica Kincaid ruminating on gardening metaphors to Ben Okri reading poems dedicated to his mother.

And then there was Oprah. She has been nearly as ubiquitous in India as she once was in the United States, with newspapers and cable channels breathlessly documenting every outfit chosen (she’s wearing a sari!), monument visited (she’s at the Taj Mahal!) and urchin comforted (she’s being serenaded by blind children!) since she arrived here last week to shoot an episode of her new television show. Her appearance at the festival drew unprecedented crowds, who lined up by the thousands (mostly in vain) for the chance to see her accept fawning praise and soft-ball questions from news anchor Barkha Dutt. (Oprah’s first impression of India? “More people than I have ever seen in my life.”) In comparison, new-age guru Deepak Chopra, who followed her on the main stage, had a hard time getting the attention of the crowds enjoying spicy kachoris and steaming chai served in tiny clay pots.

For anyone at the festival serious about books, though, there was only one spectacle worth watching — the escalating controversy over Salman Rushdie, who cancelled his planned visit on Friday after getting reports of a threat to his life from “paid assassins from the Mumbai underworld.” That improbable claim has been dismissed by Mumbai police officials as fiction. Praveen Swami, one of India’s best-connected national security reporters, wrote in The Hindu newspaper that Mumbai police had never heard of the purported assassins. The chief minister of Rajasthan state, of which Jaipur is the capital, stands behind the “assassins” claim, but Rushdie is angry and plans to address the audience by video link. That, too, is in doubt, as local officials insist that the festival needs permission even for that.

Four other speakers at the festival, including the British novelist Hari Kunzru, read from Rushdie’s The Satanic Verses, a book that is still banned in India, to show their support for him on Friday evening. As the police and local politicians got wind of their protest, the writers realized that they had just committed an illegal act under India’s arcane penal code and hastily fled. The organizers, William Dalrymple and Namita Gokhale, meanwhile, hurriedly strategized to avoid arrest. They did, and the festival went on as planned, but Dalrymple and Gokhale spent the rest of the weekend defending themselves against criticism that they had told the protesting writers to leave and sacrificed principle for the sake of the festival’s corporate sponsors, which include Bank of America, Tata Steel and Glenlivet.

In the middle of all the political theater and indignation, it was thrilling to see ideas usually left to blog posts and Op-Ed pages suddenly leap into life. During Oprah and Barkha’s lovefest, I attended a session on the “Literature of Protest,” featuring four poets who write in Tamil, Malayalam and Telugu. Witty and passionate, they insisted that it is a writer’s duty to protest, and dismissed as absurd the notion that one should only protest within the bounds of the law, as Gokhale and Dalrymple argued. One of them, Cheran, a Sri Lankan Tamil poet who fled to Canada, witnessed the 1981 burning of the Jaffna Public Library, a center of Tamil literature and culture. The attack was an early salvo in what became a 26-year-long civil war between Sri Lanka’s ethnic Tamil minority and Sinhalese majority. “If you burn books, then you will end up burning people,” he said. Near the end of the session, the book critic Nilanjana Roy stood up and announced a petition to finally remove India’s ban on The Satanic Verses. Hearing the criticism by Roy and others on the panel, Gokhale burst into the hall and interrupted the speakers to make her case, insisting that the Jaipur Four had been “asked to leave only for their own safety” and implored everyone to “just behave responsibly” within the bounds of Indian law.

Since then, India’s literary community—including the festival organizers—have rallied around Roy’s petition, which pulls back the curtain on the absurdity at the heart of this entire controversy. India’s ban on The Satanic Verses has been in effect since 1988 and has never been reviewed, even after Iran’s decision to leave Rushdie in peace. In practice, India’s ban isn’t enforced, and pirated copies of The Satanic Verses are as widely available as those of many of the other books sold at the Jaipur Literary Festival. Keeping the ban in place, however, ensures that it remains available as a mobilizing tool, to be dusted off whenever politically expedient. This year’s festival wasn’t flawless — there were too many crowds, security lines and VIPs — but all the fuss might accomplish something more profound than selling books and fame — by asking Indian democracy to put the full force of law behind the culture of open debate, dissent and protest that is as much a part of modern India as elephants, palaces and American celebrities swanning around in saris.